Should B2B sales reps be asked to make cold calls?

Let me first define what I mean by Cold Calls. To me cold calls are calling on/making personal calls on organizations to meet a decision maker for a business discussion.Without any prior appointment.

In several organizations, Cold calls are seen as a necessary component of the sales rep job description. Sales reps in most cases will have two or at most three appointments (the very productive ones) in a day. And they may or may not have other follow up work in terms of sending quotations, organizing product demonstrations etc. This does leave a substantial chunk of free time during the course of any work day.

During this period, they are expected to make cold calls on organizations to generate new prospects/sales leads. In theory this is an excellent way to utilize a Sales Rep's time. But to gain a deeper understanding of whether it should be this way, we need to analyze a few factors.

How do customers buy today?

With the prolieferation of information on the internet, the first source of information for any prospective buyer is a google search. Followed by visiting websites of organizations that he thinks are most likely to met their requirements. They then research the products, suppliers and third party reviews thoroughly. At the end of this exercise they have already formed an opinion of sorts about the companies they would like to procure their product or service from.

For companies that have been around for some time, it is likely that they already have existing vendors. Depending on their experience with these vendors, they may or may not be looking for new vendors. If the existing vendors are doing a good job of customer management (excepting for large organizations, not many invest in customer retention as a strategy), then the entry of a new vendor becomes that much more difficult.

CLients are also influenced by advertising they are exposed to in Media, Direct mail and email. In short, unlike say 15 years back, where the principal sources of information were through Sales Reps or media, the customer today has various sources of information for making informed purchase decisions, and the Sales Rep is just one of them.

Lets face it, irrespective of organization, the employee turnover of sales teams is extremely high in most organizations. Some exits are voluntary and some are not. Those that perform are rightly or wrongly promoted to managerial positions so that they can be paid more. Buyers and decision makers in client organizations too are in a churn. Given these factors, it is difficult for a selling organization to establish people to people relationships for any reasonable length of time. And in the larger client organizations we also need to contend with buying procedures, which may involve more than one decision maker, and influencers.

Consider these factors, and lets imagine the scenario of a sales rep walking into an office and wanting to meet the Purchase Manager, or the IT manager or Marketing Manager - whoever could be the logical decision maker. The probability is that in 9 out of 10 calls, they will not be entertained. And it is also unlikely that they will be given the name, phone number or the email id of the decision maker.

For the purpose of argument lets assume that the rep has a hit ratio of 1 in 10. What are the chances that they will make a favorable impression on the decision maker? I would again peg it at 1 in 10 since in most cases, the rep will be given 5 or 10 minutes to make a case, and will be listened to with scant attention, and the call will end with - I will get back to you.

With productivity being so low, why do organizations still continue with making cold calls a requisite function in the sales rep's routine? Why is it that organizations don't even ask the fundamental question as to whether the sales rep is in the first place the right person to generate sales leads?

In my opinion, the Field Sales Rep is the least qualified to generate new sales leads. The weapons in their armory are very limited - existing customers they can go to for references, and cold calling. While references are great, cold calling is a very limited exercise since physically they can only reach out to a miniscule fraction of the total potential, and of the ones they reach out to, they will get a negligiblge audience.

On the flip side, cold calling is a demoralizing activity for any sales rep. Yes, a virtue is made out of the courage and persistence displayed by Reps in this activity, but coirage and persistence in the sales rep are not the qualities that will lead to new sales lead generation.

Using Sales Reps to generate new leads is also extremely expensive. If you have 20 Sales reps, and they utilize 50% of their time in cold calling, imagine the savings if you could cut down your sales reps to 10 reps.

If you did this, and instead spent the money on marketing activities focused on lead generation there are two objectives you will achieve. (1) build product and company awareneness across a broad spectrum of customers locally and across geographies (2) you can generate a consistent level of sales leads with high probability of conversion. Higher conversions will happen only because we will be generating enquiries from the seriously interested, and also will have a lead qualification process to eliminate frivolous enquiries (of course those who qualify leads must be well trained, and not lose a good lead).

Substituting costs of sales reps to generating leads is of course a very simplistic way of looking at it, and organizational and market dynamics will call for many more factors to be considered. But this simplistic example serves the purpose of illustrating the concept of how money can be better utilized for generating leads.

It is very comforting to have physical presence of sales reps around, who generally are very optimistic right till the month end and expect good sales, only to have the optimism drop in the last week of the month or quarter, and fire themselves afresh with new enthusiasm in the new month or quarter. Their optimism rubs off on sales managers and the organization as a whole even while figures do not live upto the optimism. The cold reality is that quite often the prospects are not prospects at all, and sales projections (not backed by CRM's and rigid validation of data) are likely to be wrong month after month and year after year.

There is much to be said for making lead generation the responsibility of some other function - say marketing or a separate lead generation business function all on its own. It is after all Marketing that has the tools for generating leads under their command. For organizations that do not see the connection between sales leads and marketing, could be wasting precious cash and human resources, and also incurruing opportunity losses by not investing sufficiently in Marketing for lead generation.

This being a blog post, the coverge of issues is superficial. There will be arguments that organizations use both marketing and sales for lead generation. There will be others who say that they spend a lot of money on marketing but do not get sales leads at all, or that the leads generated by marketing are useless. In each of these arguments, a detailed examination of what actually is being done is essential. Marketing can and does generate sales leads. But Marketing covers such a wide array of marketing channels, that organizations need to examine what channels are best suited to generate leads, evaluate and implement. They will also need to look at their organization structure and processes to see how leads are handled within the organization, If there is a substantial marketing spend, with little to show by way of conversions, then there's something to be looked at in the marketing channels or communicaton used - and definitely the lead management processes. It is not only conceivable but probably quite true that many leads slip through cracks in the lead management process.

Whichever way one looks at it, the author is of the firm belief that irrespective or organization or business, cold calling is not the way to generate new leads.